What changed
RBI circular dated June 23, 2023, confirms that FBIL has been allowed to cease publication of MIFOR after June 30, 2023, under the Financial Benchmark Administrators Directions, 2019. Consequently, MIFOR is no longer classified as a 'significant benchmark' from July 1, 2023. The updated list of significant benchmarks now includes six FBIL-administered benchmarks, excluding MIFOR.
What it means for you
Banks and lenders that used MIFOR for pricing or valuation must transition to alternative benchmarks like MMIFOR or other approved rates. This aligns with global phase-out of USD LIBOR and reduces reliance on a benchmark that is no longer representative. The change may require updates to contracts, risk models, and reporting systems.
What you must do
- Review all contracts and instruments referencing MIFOR and plan transition to alternative benchmarks like MMIFOR or MIBOR.
- Update internal risk management and valuation models to remove MIFOR and incorporate new significant benchmarks.
- Communicate with counterparties and clients about the cessation of MIFOR and revised benchmark usage.
- Ensure compliance with RBI's Financial Benchmark Administrators Directions, 2019 for benchmark transition.
Who it affects
Financial benchmark administrators, Banks using MIFOR for derivatives or forward contracts, Lenders with MIFOR-linked loans or securities, Risk and compliance teams at financial institutions
Why has MIFOR been removed as a significant benchmark?
MIFOR was based on USD LIBOR, which ceased publication after June 30, 2023, and became non-representative. RBI approved FBIL to stop publishing MIFOR, so it no longer qualifies as a significant benchmark.
What benchmarks should we use instead of MIFOR?
The updated list includes MMIFOR, MIBOR, USD/INR Reference Rate, Treasury Bill Rates, Valuation of Government Securities, and Valuation of SDLs. MMIFOR is the direct replacement for MIFOR.
When does this change take effect?
The updated list of significant benchmarks is effective from July 1, 2023, as per the circular.